The Public Affairs Research Council of Louisiana (PAR) recently released its guide on the seven proposed Constitutional Amendments that will appear on ballots statewide in the Nov. 3 election.
PAR’s guide on the proposed amendments is an exceptional product, or teaching tool, that voters should study before casting ballots in the primary election. In the meantime, we offer our recommendations on the seven proposed Constitutional Amendments.
Though the U.S. Supreme Court ruled in Roe v. Wade that states could not enact legislation restricting a woman’s right to have an abortion, Amendment 1 lays the groundwork in Louisiana if the Supreme Court should overturn its 1973 landmark decision.
The proposed amendment says nothing in the state Constitution shall be construed to secure or protect a right to abortion or require funding for abortions. It would have no immediate effect since Roe v. Wade still stands, but the proposed amendment would restrict any future state judicial interpretation that might otherwise find a right to abortion.
Proponents say the purpose of this proposed amendment is to place the abortion issue in the hands of the people through their elected officials as well as their statewide vote on this amendment, rather than with their state court judges. Supreme courts in 13 other states have interpreted their constitutions to discover a state right to abortion and have used the interpretations to strike down laws for mandatory ultrasounds, 72-hour waiting periods and other limitations. This proposed amendment would prevent that from occurring in Louisiana. Judicial consideration of such important issues would be decided on the clear intent of law passed by the Legislature rather than on legal ambiguities.
The proposed amendment’s detractors argue it is meaningless unless the U.S. Supreme Court overturns Roe v. Wade. Detractors also argue the proposed amendment would allow the Legislature to pass laws restricting access to and funding for abortions.
We strongly recommend a vote FOR Amendment 1.
Supported by tax assessors throughout Louisiana and the oil and gas industry as well, Amendment 2 would specify that the production of an oil or gas well may be included in the methodology when determining the fair market value of a well for the purpose of ad valorem, or property, taxes. The state Tax Commission would create rules for how the production of a well’s oil and gas would be incorporated into the method used by local assessors. The intent of the proposed amendment is not to raise or lower taxes on oil and gas wells though a shift in tax burden would likely occur. Low-producing or shut-in wells may be assessed less, and wells with higher production potential may be assessed more.
We recommend a vote FOR Amendment 2.
Amendment 3 deals with the state’s Budget Stabilization Fund, otherwise known as the Rainy Day Fund. It was created years ago by constitutional amendment to set aside a pool of money for state government to utilize in times of financial hardship. The fund can be tapped by the Legislature when the state’s general fund revenue forecast falls below the previously expected level. The amount taken from the fund is limited to no more than the projected deficit or no more than one-third of the total fund balance, whichever is smaller. Two-thirds of the Legislature must approve of using money from the Rainy Day Fund to shore up the state budget. The fund has several sources of revenues to fill it, primarily a portion of state mineral tax revenue above a certain threshold or 25 percent of any officially designated nonrecurring revenue such as a state surplus.
Proponents of Amendment 3 wish to alter the state Constitution to allow money withdrawn from the Rainy Day Fund to be used to offset costs associated with a federally declared disaster. No other provisions concerning the Rainy Day Fund would be altered if Amendment 3 was approved by voters.
While we applaud the forward thinking of the Legislature of wanting to have the option of using the Rainy Day Fund to assist the state in recovering from a natural disaster, Amendment 3, as it was written, is a terrible proposition that should be defeated by the electorate.
The proposed amendment would allow the Legislature to use the Rainy Day Fund even if the state is not facing a sudden shortfall in revenue from a natural disaster. That would tempt the Legislature to withdraw money from the Rainy Day Fund to spend willy-nilly, or on frivolous expenditures aimed at placating special interest groups or block of voters.
We strongly recommend a vote AGAINST Amendment 3.
Amendment 4 would create a new state budget spending limit, which proponents claim would the slow the growth of spending by state government.
The state Constitution currently requires a balanced budget for state government. The amount of state appropriations cannot exceed the estimated level of state revenue. Also, state government appropriations cannot exceed a constitutionally mandated expenditure limit. The limit may increase each year based on a prescribed growth factor.
The limit applies to the state general fund and state dollars spent from dedicated funds and various fees. The spending limit does not apply to state expenditures of federal money, state surplus dollars or higher education tuition and fees. The current expenditure limit is $14.3 billion based on a growth factor of 2.97 percent for the past year. The Legislature can change the expenditure limit up or down by a two-thirds vote.
This proposed amendment would require the Legislature to establish a procedure to determine the expenditure limit. It does not alter the existing constitutional balanced budget requirement. The procedure would allow an annual growth factor that cannot exceed five percent in a year. The growth factor can be negative. Once established, the procedure for the growth rate shall not be changed except by a law enacted by a two-thirds vote of the elected members of each house of the Legislature. However, the Legislature will continue to have the same option it does now: to change the expenditure limit directly up or down to any extent with a two-thirds vote, regardless of the new five percent limit on the growth factor.
The amendment’s companion statute (Act 271 of the 2020 Regular Session) would create the new growth factor and set rules. The new growth factor would be the average of four statistics: three-year average growth in Louisiana personal income, the change in state gross domestic product, inflation and population change. The Legislature’s joint budget committee would be required to approve the data sources and the methodology.
There is no guarantee this new growth factor would be lower than the current method in every year going forward; for example, the inflation rate has been low for many years but some economists foresee higher inflation in the near future. However, based on the current consensus outlook for these metrics, the proposed new growth factor would be significantly lower than the current one over the next few years.
However, proponents of Amendment 4 argue that state government grows at either an unpredictable rate or too fast. Once a budget is increased, it is politically difficult to cut it. State government spends every tax dollar it gets and when times get tough politicians either resort to budget gimmicks or raising taxes. Cutting the budget is rarely considered seriously. Tightening the expenditure limit would attack this problem on the front end by slowing how much can be added to the budget. This amendment does not prevent the budget from growing but likely reduces the maximum growth and brings predictability when compared to the current system. It is also more flexible because legislators will be able to adjust the growth formula with a two-thirds vote rather than having to amend the Constitution, which already is too filled with details.
We recommend a vote FOR Amendment 4.
Amendment 5 would provide new options for manufacturers and local governments to schedule payments instead of property taxes for industrial expansions.
Property covered by an agreement for payments in lieu of taxes would be exempt from the payment of property taxes. The manufacturer must meet the same qualifications as required by Industrial Tax Exemption Program (ITEP) to be eligible for this new pilot program. The local assessor would list the value of the new property on the parish rolls but the payments would be whatever is negotiated in the cooperative endeavor agreement between the company and each local taxing authority. This amendment does not change or replace the laws that allow ITEP or the regular taxing process. It just adds the option of doing it under the new program.
Assessors generally oppose this amendment. These pilot programs have the potential to be more generous than the ITEP tax break. Although the manufacturer might begin paying earlier than under ITEP, the company could get a better tax break by paying less taxes than would be due after the eight- or 10-year ITEP period expires. If a business pays taxes in advance, it will want to be compensated for doing so. That means the local government will receive less tax revenue, which could lead to spending cuts or an increase in taxes.
We see no need introduce another wrinkle to the state Constitution that would allow businesses to reduce their tax liabilities owed to local governments. The existing ITEP is more than generous and already — at times — places local governments in dire financial straits.
We recommend a vote AGAINST Amendment 5.
The state Constitution provides many special property tax breaks. Property tax assessments are frozen, and therefore do not increase, for homeowners of certain income levels who are age 65 or older; disabled veterans; surviving spouses of members of the military who were killed in action; and the totally disabled. Only primary residences that qualify for the homestead exemption are eligible for the freeze. Also, the homeowner income level must be no more than $77,030. That threshold was originally $50,000 in 2001 but the number has been adjusted each year for inflation.
This proposed amendment keeps the property assessment freeze program in place but raises the income limitation level to $100,000. This new threshold would be effective upon adoption and would be adjusted for inflation each year starting in the 2026 tax year.
We recommend a vote FOR Amendment 6.
Amendment 7 would create the Louisiana Unclaimed Property Permanent Trust Fund. The fund principal would be used solely for the payment of claims. Any money not refunded in a given year would remain in the Unclaimed Property Fund rather than flow into the state general fund. The state Treasurer would invest the balance, including up to 50 percent in stocks and other equities. If the claims ever exceed collections in a given year, the Treasurer would tap into the balance of the Unclaimed Property Fund to handle the claims. Any investment income or interest earnings from the fund would be deposited into the state general fund, while the value of the unclaimed properties would remain protected.
This amendment would protect money that belongs to individuals. Unclaimed property comes to the state with somebody’s name on it and it is the state’s job to try to find those people. This money does not belong to the state; it’s for the citizens with rightful claims. This new fund is needed because the recent increase in returns to claimants has created a cash flow issue in the state Treasurer’s office. Twice the escrow fund has temporarily run dry resulting in a slowdown of payments. This improvement in finding claimants could continue due to advances in technology and efforts by the state Treasurer’s office. This amendment would arrest the growing liability associated with habitually moving excess unclaimed property to the general fund. By allowing the fund to be invested, it creates a future revenue stream for the state that would not be dependent on spending other people’s property.
We recommend a vote FOR Amendment 7.
Proposition to Allow
Sports Betting by Parish
This proposition makes no change to the state Constitution. Under this act, sports betting would be permitted in any parish where the majority of voters say yes on the Nov. 3 proposition for the new form of wagering. However, even in those parishes, the wagering would not occur immediately. Such bets would continue to be illegal until state laws and regulations are adopted, including methods of taxation. Net gambling winnings already count as income for state personal income tax purposes, but it is possible if not likely that additional state and local taxes and fees could be created. Regulation would fall to the Louisiana Gaming Control Board, which is already responsible, along with State Police, for overseeing video poker and casinos. The Legislature did not provide a fiscal impact report on the bill.
People already bet illegally on football, basketball and other games. This vote would just legalize and formalize the activity and allow the state and local governments to regulate and tax it. Louisiana could win back some of this business and tax base from Mississippi and other states that are capturing the market, as well as unsanctioned online betting platforms that are hosted overseas.
We recommend a vote FOR this proposition.